Beyond making it more difficult for first-time buyers to qualify for loans, the recent, far-reaching changes to federal mortgage rules are also applying a significant level of stress to home sales numbers nationwide, according to the latest analysis by Dominion Lending Centres.
In a February 15 note, DLC chief economist Sherry Cooper cautioned that 2017 will prove to be a challenging year for the Canadian residential real estate segment and for the economy as a whole.
“Housing activity will not provide the boost to overall economic growth in 2017 that it did in 2015 and the first half of 2016 as first-time homebuyers will find it more difficult to qualify for a mortgage and credit availability is diminished by the disproportionate impact of the new regulations on nonbank lenders,” Cooper wrote.
Fully half of the nation’s housing markets—including the Greater Toronto Area, Greater Vancouver, and Montreal—have suffered declines in sales activity.
“Supply shortages are a major issue depressing sales activity and raising prices, especially in and around Toronto and parts of BC. Price pressures will continue in these markets unless demand declines significantly,” Cooper added.
Accompanying these developments is the consistent dearth of housing supply in major metropolitan markets.
“The number of newly listed homes fell 6.7% in January, the second consecutive monthly decline. New listings were down in about two-thirds of all local markets, led by the GTA and environs across Vancouver Island.”
The statements echoed recent warnings from BMO economist Robert Kavcic, who predicted a gradual winding down of sales activity due to various ill-advised policy moves by federal and provincial governments last year.
“One of the big contributors has been Vancouver, and just through the last four or five months the market there has already started to correct,” Kavcic told The Canadian Press last month.
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